Internally Generated Revenue: What are the short term options at State Level?

Internally generated revenues (IGR) are revenues generated by States within the Nigerian federation, independent of their share of revenue from the federation account.

With the lingering economic struggles, there have been renewed calls for the Nigerian government to diversify the economy away from the oil and gas sector.

Unfortunately, Nigeria’s dependence on the oil sector is too critical and the effect of Nigeria’s dwindling oil revenue is damaging with reverberations beyond the Federal Government.

State Governments who depend primarily on statutory allocations from the federation account have found their ability to deliver the most basic public services (education, health, and others) to the citizenry hampered significantly.

The hardship is most severe in States where IGR is extremely low. For some of such states, the estimated IGR contribution to 2017 budget is below 10%1. We can all recall that one of the first hurdles this present administration faced upon assumption of office was the debt owed by various state governments especially to their workforce. Most of the States had to depend on bail out funds from the Federal Government to settle payroll costs and other recurrent expenditure.

Although some State Governments are genuinely eager to grow their IGR base, there seems to be a general dearth of innovative ideas and a lack of political will to harness available opportunities for revenue diversification. Many legitimate sources of revenue remain unexploited, while procedures for collecting, remitting and accounting for the existing revenue sources often fall short of expectations, giving room for avoidable leakages.